HVAC&R contractors in SA – are we being bullied?

SARACCA president and owner of 52 Engineering, John Parry, wrote this letter to HVAC&R contractors in South Africa about the risks involved in giving credit…

Having first-hand experience of a large building contractor going into business rescue, I would like to point out the risk involved in giving credit, writes John Parry, current South African Refrigeration and Air Conditioning Contracting Association (SARACCA) president…

Should HVAC contractors give such large credit to the building industry? Do they have a choice?

While attending the Master Builders SA conference in September, the sorry state of our building industry was highlighted.

Some of the problems mentioned were slow payments, government policies, little public and private investment and security.

Below is a summary of ‘South Africa’s once-great construction industry’:

Aveng (Grinaker/LTA)

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Huge financial losses

Basil Read

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In business rescue

Murry and Roberts

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Sold its local civil and building construction

Stefanutti Stocks

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Restructured

ESOR

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In business rescue

Liviero

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In business rescue

NMC

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Liquidated

So, should HVAC contractors give such large credit to the building industry? Contracting is risky enough with employment, safety, design, resource planning, without this having to be major headache.

One of our SARACCA members told me that they were bullied into signing a contract with a builder. When he asked the builder for a payment guarantee, he was asked by the builder if he was he financially stable enough to handle the project.

When he responded that it wasn’t his responsibility to fund the project, both the consultant and project manager told him to sort it out with the builder and to get his affairs in order or else he was a risk to the project.

Isn’t this contractual bullying?

Why don’t clients pay us directly?

Why shouldn’t we receive payment guarantees?

Credit has always been a huge risk to the HVAC industry which is being expatiated as the house of cards collapse in the construction industry.